Temporary accommodation spending highlights UK property concerns

Data obtained by the BBC has cast a very interesting light on the UK property market and in particular money spent by local authorities on temporary accommodation. The information shows that more than £3.5 billion was spent on temporary accommodation for homeless families over the last five years. During this period the annual cost increase by a staggering 43% with £851 million spent on temporary accommodation in 2015.

What do these figures show?

It is common knowledge that there is a significant shortage of affordable/council housing stock in the UK. While the 1980s saw the “right to buy” campaign by the Conservative government this has left many local authorities short on housing accommodation. This era can be seen as a double edged sword because it did light the blue touch paper for a period of significant investment in the UK property market. Indeed we also saw a massive increase in owner occupation as families were encouraged to purchase their council properties at below market rates.

The fact that councils spent £851 million during 2015 alone on temporary housing is alarming. For the record, temporary housing can take in bed-and-breakfasts, hostels and private rented accommodation for homeless families. The exact criteria for those who qualify are often vague and can vary between councils.

Unsustainable spending

Councils have already expressed their concern at the ever-growing cost of temporary accommodation. The recent increases are unsustainable going forward at a time when some areas of the UK have seen a drop in the number of homeless families. It is also alarming to see that 61% of the £3.5 billion expenditure relates to London alone. This in itself has increased by 85% since the 2011/12 financial year. Indeed just 10 London boroughs were shown to account for more than 60% of the increase in expenditure over the last four years.

One fact which may surprise many is that Scotland spent £750 million on temporary accommodation over the period in question. When you strip out London expenditure this is larger than England where the revised figure is £578 million. Scotland is spending on average £150 million a year on temporary accommodation despite a recent fall in the number of homeless families. The Welsh authorities have spent £45 million with annual expenditure falling by 26% over the last five years.

The UK property market quandary

While there is no doubt that there is a shortage of affordable/council property stock across the UK, is there a quick short-term solution? It would be easy to say that money spent on temporary accommodation should be funnelled into new build properties. However, in the meantime where do you house families who have nowhere to live?

It will be interesting to see how the various authorities up and down the country react to this report from the BBC. It certainly casts an interesting light on the market and the additional expenditure on temporary accommodation. In reality it will probably take a significant additional one-off investment by the UK government to kickstart the newbuild process. This would help gradually reduce the cost of temporary accommodation. However, this will not happen overnight.